A roundup of some of the North American equities making moves in both directions today
On the rise
A day after surging over 40 per cent, American Airlines Group Inc. (AAL-Q) jumped another 30 per cent in early trading on Friday.
On Thursday, American Airlines said it will aggressively add back flights in July — a bet that the slow recovery in air travel will gain speed this summer as states re-open their economies.
United Airlines (UAL-Q), which was up 20.9 per cent, also announced plans to add back flights, while taking a more cautious approach that includes resuming about 130 nonstop routes in July that were suspended when travel collapsed as the coronavirus spread rapidly.
Both airlines will run much smaller operations than they did last summer, but they could exceed the market’s low expectations for business during the crucial peak vacation season.
American said it plans to operate 55 per cent of the U.S. flights that it ran in July 2019, a huge increase over the 20-per-cent schedules it ran in April and May. The airline is more guarded about demand for foreign travel. It plans to operate just 20% of the international flights that it ran last July.
In Toronto, Air Canada (AC-T) followed its U.S. peers higher, jumping over 13 per cent.
Major Drilling Group International Inc. (MDI-T) jumped 7 per cent after it reported after the bell on Thursday revenue of $88.8-million for its fourth quarter ended April 30, down from $100.4-million a year earlier.
Its net loss was $74.3-million or 92 cents per share down from a loss of $3-million or 4 cents a year earlier.
Its adjusted EPS came in at a loss of 4 cents versus an adjusted loss of 2 cents a year earlier. Analysts were expecting an adjusted loss of 2 cents per share and revenue of $95.1-million.
In a research note, Laurentian Bank Securities analyst Ryan Hanley said: "With government restrictions slowly being lifted in Canada & the U.S., it is our expectation that we will continue to see slow & steady increases of activity in this region. Several countires in the Central & South America region are also slowly re-opening (particularly Mexico), which should also lead to slow & steady increases of activity beginning in June.
“With its strong balance sheet, MDI has been able to maintain strong levels of inventory as well as retain all of its employees. As a result, we continue to believe that the company remains well positioned for an upturn in drilling activity.”
U.S. jewelry chain Tiffany & Co. (TIF-N) increased 8 per cent amid reports French luxury goods giant LVM is not seeking to renegotiate its US$16.2-billion acquisition after deliberating whether to do so.
LVMH CEO Bernard Arnault had been in talks with his advisers this week to identify ways to pressure Tiffany to lower the agreed price of US$135 per share in cash, Reuters reported on Wednesday.
He considered whether he could argue that the New York-based company is in breach of its obligations under the merger agreement, sources said at the time.
LVMH has decided it will not raise the issue of repricing the deal with Tiffany for now, after it considered the legal hurdles involved, the sources said.
Gap Inc. (GPS-N) on Thursday reported a quarterly loss of nearly US$1-billion as the apparel retailer was forced to close its stores due to the coronavirus outbreak.
It shares at narrowly higher on Friday.
San Francisco-based Gap, which operates nearly 2,800 stores in North America, said 55 per cent of its company-operated stores in the region were now open and sales from online operations were booming.
Citi analyst Paul Lejuez said: “As expected, 1Q was a weak qtr with total sales down 43 per cent due to store closings. So far, stores that have reopened are running down 30 per cent on average with Old Navy outperforming the average and BR running below. Though it is hard to make too much out of this period, this is a little below several others that have reported trends in reopened stores, especially given ON is primarily off-mall and their customer should be seeing the benefit from stimulus. GPS is yet another retailer talking about using a ‘pack and hold’ inventory strategy, which we are skeptical of. Given these concerns, we remain on the sidelines.”
Broadcom Inc. (AVGO-Q) was up 4.8 per cent after it forecast current-quarter revenue with a midpoint slightly below analysts’ estimates, in part caused by a delay at a “large North American mobile phone” customer that analysts believe is Apple Inc.
The company forecast fiscal third-quarter revenue of about US$5.75-billion, plus or minus US$150-million. Analysts on average were expecting US$5.79-billion, according to IBES data from Refinitiv.
“We would normally expect to see a double-digit sequential uplift in revenue from the ramp of next-generation phone at our large North American mobile phone customer,” Chief Executive Hock Tan said on a conference call. “However, this year, we do not expect to see this uptick in revenue until our fourth fiscal quarter.”
Tan cited a “major product cycle delay in wireless” without naming the customer, but Broadcom got about a fifth of its revenue from Apple in its most recent fiscal year and in January entered into to two multi-year agreements worth as much as $15 billion in revenue to supply Apple with wireless components.
On the decline
Bombardier Inc. (BBD.B-T) was down over 4 per cent after it said on Friday it would cut 2,500 jobs, or about 11 per cent of its workforce, at its aviation unit as the COVID-19 pandemic’s crushing impact on the air industry adds to its long list of problems.
The airline industry has been among the worst hit by the coronavirus crisis, which has dented travel demand and forced several aircraft manufacturers, including Bombardier’s peers Boeing Co and Airbus SE, to cut production as customers defer deliveries.
“Bombardier must adjust its operations and workforce to ensure that it emerges from the current crisis on solid footing,” the company said in a statement, citing an estimated 30% fall in business jet deliveries across the industry due to the pandemic.
Bombardier, which has nearly 60,000 employees at its aviation and rail units, said it would book a $40 million related to the job cuts.
The company, which agreed to exit the commercial aircraft business in February, is in the process of selling its rail business to French TGV high-speed train maker Alstom for up to 6.2 billion euros ($7.02 billion), and said last month that the deal has not been affected by the coronavirus crisis.
Slack Technologies Inc. (WORK-N) posted slowing quarterly sales growth, disappointing investors who had expected a surge in demand for its workplace messaging app as companies rapidly adopt remote working tools and technology.
Shares of the company, which had surged nearly 80 per cent this year, dropped 18.8 per cent in Friday trading.
Slack also withdrew its 2021 billing outlook citing uncertainty driven by the COVID-19 pandemic, and said it had seen sales from some large customers slow down in the worst-affected industries, such as travel, hospitality and ride-sharing.
“There’s less visibility into how spending will trend for the remainder of the year, particularly if the economic effects of the COVID-19 pandemic persist or worsen,” Chief Financial Officer Allen Shim said in a post-earnings call with analysts.
RBC Dominion Securities’ Alex Zukin said: “Slack reported a strong start to FY21, with results ahead of guidance and consensus across billings, revenue, and profitability, and F2Q guidance was better than expected. FY21 guidance was increased, though by less than we believe investors were looking for, and billings guide was pulled, but we chalk these up to conservatism on the macro and the decreasing relevance of billings.”
With files from staff and wires